KARACHI: While millions of Karachiites have to endure spiralling power breakdowns, the latest increase in tariff allowed to Wapda by Nepra, and which will also affect consumers of the KESC, will be seen as a new blow.
Over the years Karachiites and electricity consumers in other parts of the country have been told that tariff increases are inevitable owing to the high cost of fuel and line losses. But the latter are largely due to the utility’s own corruption and failure to plug loopholes in the transmission system.
Expressing dismay over the increase, SITE Association of Industry chairman Haroon Farooki says: “It is neither good for the general public nor for domestic industry, which is confronted with tough competition internationally at present and is going to face serious repercussions of the US-led Iraq War”.
He said the main reason for the downward trend in productivity was the high rate of addition of federal taxes in electricity bills, which appeared to be the easiest way to squeeze the public and the indigenous industry at the cost the of corrupt tax collection machinery.
According to Mr Farooki, the overall impact of 12 paisa increase per unit in power rates allowed by Nepra to Wapda, which would be automatically filtered down to the KESC, would have an impact of 3.11 per cent on a medium size industry in the KESC network, consuming 172,114 units per month. Now these units will have to pay Rs816,300 instead of Rs790,725.60 before the new increase.
He warned that the industrial base of the country would be weakened in the wake of the WTO regime if the government did not make efforts to reduce input cost.
It is ironical that the day Prime Minister Zafarullah Jamali presided over a meeting of the Ministry of Water and Power and instructed them not to increase electricity tariff and cut down power thefts, Nepra announced its 14.35 paisa per unit increase. Perhaps the general, who heads Wapda, is more powerful than the elected head of the government.
The question is whom is Nepra protecting? Is it the consumer who pays the bills or those Wapda/KESC officials who abet electricity thieves and make money?
One cannot understand the rationale of frequent electricity tariff hikes despite advice from experts that the higher the tariff, the more profitable and attractive power thefts become and make our industry non-competitive.
This increase has come at a time when international oil prices have crashed and will continue to be at a very low level for a long time to come. The government stands to make a whopping Rs10 billion more by its so-called “development surcharge” which is already at 60 billion or so.
This may become the second largest taxhead after sales tax. The much touted revenue figures are due to these huge taxes, which the government had collects at the cost of industry, agriculture and the common citizen.
A false alarm about an oil shortage was created and large stores of petroleum and its products were purchased at high prices to create large reserves, although it is well known and is being openly said that the war is being waged to control the large oil reserves of Iraq and to keep international prices low. It was known that no oil supply routes would be disturbed. The airlines are operating normally to the Gulf. The Sharjah cricket cup is being played as usual.
Electricity thieves have pushed honest competitors out of the market. For them it is either steal or perish. This is much more significant in processes where electricity is a major raw material. One such process is iron re-rolling. Scrap goes from Karachi to Lahore. It is rolled into iron rods which are sent back to Karachi for the consumption of the huge construction industry in the city. The Karachi units cannot compete in spite of the fact that they save a large amount on freight.
The World Bank /IMF philosophy being followed by our government is to shift the burden of the thieves on to the shoulders of those who are honest and pay their bills.
The increase in agricultural tariffs played havoc with our agriculture. The 50 MAF per year assured groundwater resources mainly in Punjab could not be utilized to their capacity because it had become too expensive to run tubewells on electricity or on diesel. Small landholders in Punjab cannot afford to foot the bill and have to give their land on nominal rent to large land owners.
The under-utilization of groundwater resources in Punjab in turn creates pressure on the river waters. A share higher than allowed under the water accord is given to Punjab in order to meet its shortfall. Sindh and Balochistan go dry and inter-provincial tensions are created which are harmful to the nation’s future.
Under the water accord, reservoirs have to be regulated in a way that the needs and schedules of the agriculture sector are met. But these are being used basically as power generation plants in order to generate cheap electricity and sell it at a huge profit. Water is withheld in the reservoirs, dead levels are kept unnecessarily high, and no desilting of reservoirs has been done for the last so many years.
In view of the concern expressed by knowledgeable quarters, the government should immediately create parity in local and international electricity rates besides reducing the price of other input costs, so that the economy could be revived at the earliest in the country.
